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Urban Development

More and Better Financing for Development

Homi Kharas's picture

One of the major issues in the Open Working Group’s outcome report on the shape of the post-2015 agenda is the availability and access to financing to allow the goals to be met. There is a great temptation to simply try and calculate the financing needs for each goal and add them up to get the total financing need. Because this approach seems simple, it is appealing to many. The problem is that it is conceptually wrong.
 

Nyerere’s Biggest Surprise: An Urban Tanzania

Jacques Morisset's picture

 Scott Wallace / World BankIf Mwalimu Julius Nyerere, the Father of the Nation, visited Dar es Salaam today, there is no doubt he would be surprised at what the city has morphed into since his time. From less than one million people in the early 1990s, Dar es Salaam’s population has grown at an average rate of 5.8 percent annually to reach 4.4 million people today, making it one of the fastest growing cities in the world. It is now estimated that the city will be home to over 10 million inhabitants by 2027.

The urbanization process in Tanzania is a tale of two cities, as illustrated by the recent growth of Dar es Salaam. At first glance, Dar es Salaam looks like a modern city with a panoramic skyline of tall new buildings. But this façade of the modern metropolis quickly gives way to sights of congestion in the city slums, highlighting the realities of poor urban planning and inadequate public services.

Informality – a Blessing or a Curse?

Megha Mukim's picture

IN134S06 World Bank Governments (and donors alike) don’t like dealing with informality. It’s messy, dirty, essentially unmeasurable, and its character varies dramatically. From one industry to the next. From one city to the next. It’s also beset with fiendishly difficult problems – informal firms are often household enterprises (employing mainly family labour, and not hired labour). Thus, they have to make impossible trade-offs between production and consumption.
 
And yet – the size and the importance of the informal sector in most countries shows no signs of abating. On average the informal share of employment ranges from 24 per cent in transition economies, to 50 per cent in Latin America and over 70 per cent in sub-Saharan Africa. In India, employment within the informal sector is growing, while that in the formal sector remains stagnant. Yet - very little is known about the relationship, whether symbiotic or competitive, between the two sectors.
 
In a new paper, I notice that in India formal firms tend to cluster with informal firms – especially in industries like apparel, furniture and meal-making. The firms coagglomerate not only so that they can buy from and sell to one another – but importantly, also because formal firms tend to share equipment with and transfer technical knowledge to their informal counterparts. Such technical and production spillovers are found in clusters of domestic-foreign, exporter-non-exporter and high-tech-low-tech firms. It is no surprise then that formal and informal activity could be complementary. Informal can also be an outlet for entrepreneurial activity, especially in places with high levels of corruption, or where formal firms are often mired in complex regulations.

To Maximize the Gains from Trade - Focus on Firms and Cities

Megha Mukim's picture

Trade and growth go hand-in-hand. When the 2008 global financial crisis hit, both collapsed.

Since then both have steadied somewhat. But recovery has been jobless in many countries. The biggest challenge that developing countries will face: sustaining economic growth, while maintaining their focus on reducing poverty and inequality. Trade can be an important weapon in the policy-maker’s arsenal to help tackle these dual objectives.

Broadly, economists agree that declining levels of poverty have been accompanied by sustained periods of rapid growth and openness in all countries. In India, there has been a wealth of econometric work that demonstrates the links through which openness to trade has contributed directly to poverty alleviation – via growth and employment. More recently, Arvind Panagariya and I measured the impact of trade on poverty across different social groups – castes and religions – in India. We found that trade openness lifts all boats, for schedules castes and tribes, and for marginalized communities. Interestingly, the impact was especially strong in urban regions.   Other research finds that states whose workers are on average more exposed to foreign competition tend to have lower rural, urban and overall poverty rates.

中国的三中全会:会带来诸多改变——对其他发展中经济体而言亦是如此

Manu Bhaskaran's picture
Also available in: English

CN142S09 World Bank 一些观察人士提醒人们三中全会后中国共产党提出的各项改革可能因为既得利益方的阻力或缺乏政治意愿而落空。而我认为这会给中国带来根本性变化,只因为一个简单的理由——政治。首先,中共领导层完全明白该党已经因为越来越严重的腐败问题和裙带之风、越来越招人怨恨的收入不均、对食品安全的巨大怀疑以及日益恶化的污染而丧失了人民的信任。第二,他们认识到现有的经济模式不能持续地提供足以换取民众对党的拥护的经济进步。中国共产党的领导者们知道需要对当下的经济模式作出根本性改变才能重新赢得人民的信任。正因为要生存下去就要进行重大变革,因此,中共领导层将全力以赴。
 
但是有没有进行改革的政治能力呢?且来看看习近平主席是如何亲自掌控监督经济改革的机制的。习近平将领导负责“全面深化改革”的小组,这个小组将具体实施规划的各项改革。此外,他还设立了一个将由他领导的“国家安全委员会”。原中国领导人江泽民曾试图设立这样一个国家安全委员会,但未能成功。显然,习近平的同事们准备给予他推进改革所需的政治权威,而即便是江泽民这样有影响力的人也缺乏这种权威。有了他个人的权威作为这些改革的后盾,习近平不太可能妥协或退让。
 
最开始变革将分阶段谨慎地展开,但累积起来后会在2020年前改变中国的经济格局。在经济领域内,市场力量将被赋予更大的影响力,国有企业将被迫按照更商业化的方式运作,私营部门将被给予更大的活动空间。农村土地市场将建立起来,同时对农村移民在城市地区生活的限制也将分阶段取消。中央、省和地方政府之间的关系将有所改变,后两级权力部门将能更公平地分享到税收收入,从而与它们承担的责任更一致。金融改革将消除诸如对储户的不公平待遇等诸多扭曲问题。如果一切都能按计划进行,中国将变成一个更高效的经济体,拥有比现在更具活力的私营部门,出现从能在环境和收入分配方面产生更好结果这个意义上来说质量更高的增长。
 
其他发展中国家应该留心中国发生的变化。如果中国能咬紧牙关,作出维持经济发展所需要的痛苦改变,其他大的发展中经济体——比如印度和印度尼西亚——为什么就不能同样做到呢?
 

China’s Third Plenum: Much will Change - for Other Developing Economies Too

Manu Bhaskaran's picture
Also available in: 中文

CN142S09 World Bank Some observers caution that the reforms proposed by the Chinese Communist Party (CCP) after the Third Plenary meeting of its Central Committee may fall short of promise because of resistance from vested interests or a lack of political will. My view is that it will bring about fundamental changes in China for one simple reason - politics. First, the CCP leadership fully understands that the party has lost the trust of the people because of rising corruption and cronyism, increasingly offensive income inequality, huge question marks over food safety, and worsening pollution. Second, they realize that the current economic model cannot sustainably deliver the economic progress that citizens expect in return for their allegiance to the CCP. The CCP leaders know that fundamental changes are needed to this economic model to regain the trust of the people. Since survival demands big changes, the leadership will pull out all the stops.

Can Outer Space Tell Us Something Useful about Growth and Poverty in Africa?

Tom Bundervoet's picture

Imagine you lived in a world where night lights from satellite images tell you instantly about the distribution and growth in economic activity and the extent and evolution in poverty. While such a world is probably still far off, night lights as observed from space are increasingly being used as a proxy of human economic activity to measure economic growth and poverty. In a fascinating 2012 paper in the American Economic Review, Henderson and colleagues found a strong correlation between growth in night lights as observed from space and growth in GDP, basedon data on 188 countries spanning 17 years. They use their estimates for two main purposes: (i) to improve estimates of “true” GDP growth in countries with weak statistical capacity and (ii) to estimate GDP growth at levels where national accounts are typically non-existent (sub-national or regional levels; coastal areas;,…).

African CityThe added value of such an approach for Africa is obvious. Most African countries rank low on the World Bank’s Statistical Capacity Indicators, with some countries lacking national accounts altogether. Some African countries are huge (in size), and having sub-national estimates of GDP growth would help identifying leading and lagging areas, and why. For a country such as Kenya, which is starting an ambitious decentralization project, the approach could estimate GDP growth for its 47 newly formed counties to help in their economic planning. Nightlights can even be used to show where the Pirates of Somalia are spending their ransom money.

The Making of the Middle Class in Africa

Mthuli Ncube's picture
Also available in: Français

Robust economic growth over the past 15 years has led to visible changes across Africa. Visitors to cities on the continent cannot help but notice the emerging African middle class.  Defined as those earning between $2 and $20 a day in 2010, Africa’s middle class is expected to grow from 355 million (34 percent of Africa’s population) to 1.1 billion (42 percent of the population) in 2060. To be sure, about 60% of them – approximately 180 million people – remain barely out of the poor category. They constitute the ‘floating’ class, earning between $2 and$4 a day. They are in a vulnerable position, constantly at risk of dropping back into poverty in the event of any unexpected shocks, such as the loss of income and the death of the head of household.
Pointing out business processess at ITU-Inveneo ICT Entrepreneurship Training Not only is Africa’s middle class crucial for economic growth, but they are essential for the growth of democracy and will play a key role in rebalancing the African economy. Consumer spending by the middle class has reached an estimated $680 billion in 2008 – or nearly a quarter of Africa’s GDP. By 2030 this figure will likely reach $2.2 trillion and Africa will comprise about 3 per cent of world-wide consumption.

Despite a reputation for thrift, middle-class households do allocate part of the household budget to leisure and entertainment. Our analysis shows that middle-class households are likely to spend more on private education and health, as well as on household assets such as televisions and refrigerators. In addition to being better off in material terms, the middle class are in general both more satisfied and more optimistic about the future than their poorer compatriots.

Fiscal Strains in the Years Ahead

Augusto Lopez-Claros's picture

The world’s population by 2030 is projected to be 8.1 billion, 2 billion more than in 2000. A full 95 percent of the increase over this 30 year period will take place in the developing world, nearly all of it concentrated in urban areas. There is a relentless process of urbanization under way all over the world which, for instance, has transformed China’s landscape and has contributed to that country’s rapid pace of economic growth. Whereas in 1980 less than 20 percent of China’s total population of close to 1 billion was living in urban areas, by 2000 this share had risen to 33 percent. The urban population during this period expanded from about 190 million to over 420 million, and is projected to reach 1 billion by 2030. Well before 2030 China will have several megacities, with the population of Shanghai likely to exceed 25 million.
The Hai river and surrounding park and high-rise buildings